Stock market investments

[Alberto]

We used to have a very nice thread in the old TT forum about Investment and stock market. Surprised we don't have yet one like that here. So here we go....

When I started investing regularly in the stock market in 2018, I thought I would have been happy with an average 7%/yr return (the average since record began, which unsurprisingly is the number most government say is fair to expect for long term investments like pensions).

Instead it averaged 11%/yr. And I'm not smart (you knew this already if you knew me), I only ever bought simple boring indexes with ultralow fees. And no posh smiley cheeky expensive unnecessary vendors (or "advisors", as they like to be called).

I wish I started 20yr earlier, in hindsight I was too cautious, wanted to get more stability in term of family and employment and housing, now I say this was a mistake.

Huge jump in stock value since the Trump won. I wish he had not won (altogether we would be better off, including most of those who voted him) but never mind this is another story...

So what's your latest thought about investment and stock market?

[Fraufruit]

Trump isn't in the White House yet. The market didn't perform very well his first term.

Yes, starting early is good but it's never too late.

[Alberto]

The market didn't perform very well his first term.

SP500 jumped ca 15%/yr during his 1st term (2150 to 3500). I would therefore say the market did very well during his 1st term.

Trump isn't in the White House yet.

True, but since the election the market skyrocketed. Can't prove this is causal but ...

[Fraufruit]

https://markets.businessinsider.com/new ... 1029987163

Yes, good for a Republican president

[Alberto]

https://markets.businessinsider.com/new ... 1029987163
Yes, good for a Republican president

Very interesting, thanks for sharing.

[alma.freya]

And I'm not smart
...
I only ever bought simple boring indexes with ultralow fees.

Contradicting yourself there.

[Nixon]

You named your thread “Investment”.
Did you mean just stock market related stuff or other kinds are welcome to be discussed too.
Example: real estate.

[Alberto]

You named your thread “Investment”.
Did you mean just stock market related stuff or other kinds are welcome to be discussed too.
Example: real estate.

My opinion is that it's best to have separate discussion for them.

[Alberto]

https://markets.businessinsider.com/new ... 1029987163

Yes, good for a Republican president

This really grabbed my attention.
So the question I asked myself is: how does the stock market behave differently for Dem or Rep US president?
Of course this is a question others, smarter, have already asked, and answred.

Can you try to answer, or at least make a guess, before reading further?

Without knowing nothing about US, politics, or economics, as I do, my line of thought was: Rep lower taxes to most and especially to the richer, and favor deregulation, smaller goverments, and smaller gov budgets, all things businesses like (no, I'm not saying US Rep preidents are better for the economy). Therefore I expected the stock market performed better during Rep presidents than otherwise.

Here what I found:

The average annual return for the S&P 500 index when we had a Republican President was 9.32%. When we had a Democratic President, the S&P 500 average 14.78% per year.
https://retirementresearcher.com/are-re ... ck-market/

[Alberto]

https://markets.businessinsider.com/new ... 1029987163

Yes, good for a Republican president

This really grabbed my attention.
So the question I asked myself is: how does the stock market behave differently for Dem or Rep US president?
Of course this is a question others, smarter (well, it doesn't take much to be smarter than me, so no big deal...), have already asked, and answered.

Can you try to answer, or at least make a guess, before reading further?

Without knowing anything about US, politics, or economics, as I do, my line of thought was: Rep lower taxes to most and especially to the richer, and favor deregulation, smaller goverments, and smaller gov budgets, all things businesses like (no, I'm not saying US Rep preidents are better for the economy). Therefore I expected the stock market performed better during Rep presidents than otherwise.

Here what I found, ca 100yr of data:

The average annual return for the S&P 500 index when we had a Republican President was 9.32%. When we had a Democratic President, the S&P 500 average 14.78% per year.
https://retirementresearcher.com/are-re ... ck-market/

[Fraufruit]

In a nutshell, Republicans don't do what they say they stand for - smaller government, etc. They give breaks to the rich and the poor get poorer. Very bad for the economy.

That's my opinion after observing for many years.

[HEM]

In a nutshell, Republicans don't do what they say they stand for - smaller government, etc.

But thats the case everywhere.

How often do you hear German politicians talk about reducing burocracy? And nothing happens.
Why? Because many who sit in parliament live from burocracy. Just look at the over-complex taxation system
or health insurance...

[Alberto]

How often do you hear German politicians talk about reducing burocracy? And nothing happens.
Why? Because many who sit in parliament live from burocracy. Just look at the over-complex taxation system
or health insurance...

Very interesting.
Actually I disagree: in my opinion it is not vested interesting preventing german politicians from tackling excessive complexity. Certain things are just ingrained in german mentalities. Germans really do feel overall better in a system controlled by many rules, better know what to expect, how you have to behave, what you're allowed and what you're forbidden and what's compulsory etc.

But as interesting as this diversion is, can we please not move away from the original topic of stock market investement...

[Fraufruit]

Someone is becoming very German.

[Alberto]

The honeymoon between Trump victory and the stock market is already over.
Now 10 days later my portfolio, mostly american, is 0.4% lower than its 6.11 peak.

[yesterday]

Well the stock market has done very well over the last 15 years or so

Some people think that its over valued, supported by many facts and figures.

Some people are reducing their involvement in stocks very much.

So does anybody here think we are looking at a correction or stock crash ??

I start to think, it is over valued and it would be wise to scale back my involvement with stocks, but I find it hard because the market is going up so fast, that I cannot do it !

What do people here think, I would be interested to know

[Alberto]

What do people here think, I would be interested to know

I think you should first look at what stage of your financial life you are.
If you're young, say more than 10yr from retirement, then it would be wrong NOT to take risks. Otherwise you better prefer less volatility, so less shares and more bonds and property.
Regardless what you think the market will do in the next blabla years. Which, btw, you don't know.

[alma.freya]

Some people think that its over valued, supported by many facts and figures.

Some people are reducing their involvement in stocks very much.

Who are these people? They're probably the same people who have been predicting a crash for the past decade. I wonder how much money they have lost out on by not being invested in the market over that time.

One thing is certain; when the stock market is up, people will be predicting a crash is imminent.

A crash is always coming, and providing you aren't retiring soon you can just ignore it. If you have constant anxiety about a market crash then maybe investing in something with lower risk is recommended.

Here is a series of articles about the stock market that focusses on crashes and what you should do when they happen (nothing!):
https://jlcollinsnh.com/stock-series/

I hope it answers some of your questions and provides reassurance.

[yesterday]

yes, this is what I think aswell, and for the record I am within a couple of years or a year of stopping working. Which is what I am thinking.

You have people like warren buffett, withdrawing money from stocks at the moment. He is supposed to know whats going on, By withdrawing money, he is kinda saying, there maybe be a crash coming, and its not worth the risk of stocks at the moment. He is not doing it, because he will become poor, he just thinks the risk is high at the moment. By the way warren buffett, is not saying anything, he is just taking money out of stocks, the only reason I can think for him to do this is that, he thinks a crash is becoming more likely.

Of course no one really knows a crash is coming, its all a risk.

I was just thinking about scaling back a bit, take the middle road, no hugh gains anymore, but also, reduced losses if the crash happens as well.

I know people who have held back over the years and lost, shed loads of gains, because they were not sure.

As said, I am close to finishing work, if the crash occured just after I go, it will reduce what I can do, in the future.

Its OK, nobody really knows the answer

[Alberto]

So you will stop working in a few years only.
Presumably you will then have some kind of retirement income, like DRV....oder...?
If yes, is this income reasonable for ordinary living so that you don't *really* have to access your invested capital?
If yes, I wouldn't touch it.
If not, maybe.

As I wrote earlier: I don't think this kind of decision should be based too much on your market expectations. Rather, where one stand on his financial life, should be the major driving criteria.

No taking credit away from Buffet, but I wouldn't really look at what he's doing. There's probably a huge amount of stuff that we don't know behind what he does, so reaching big conclusions on extremely limited knowledge is generally bad, "he's selling stocks, so he probably expects a crash, maybe I should take examples.....". Sorry, not saying Buffet is wrong but I don't subscribe to this.